Key Takeaways:
Samsung Electronics faces a potential 7% to 12% hit to its 2026 operating profit if it concedes to union demands ahead of a planned 18-day strike, according to a JPMorgan research report.
"If the union's request is fully accepted, Samsung's 2026 operating profit faces a downside risk of 7% to 12%," Jay Kwon, an analyst at JPMorgan, said in a May 6 report, adding that about 1% to 2% of semiconductor revenue could be lost from production halts.
The warning follows a move by Citi Research, which cut its price target on Samsung by 6.25% to 300,000 won, citing bonus provisions. JPMorgan maintained its 350,000 won target, while Daol Investment & Securities raised its target to 390,000 won on strong memory pricing.
The labor dispute adds a layer of uncertainty for the chipmaker, which recently surpassed a $1 trillion market capitalization, potentially disrupting its competition with rival SK Hynix in the high-bandwidth memory (HBM) market.
The National Samsung Electronics Union (NSEU) has called for a strike from May 21 to June 7. Its core demands include allocating 15 percent of the company's annual operating profit for employee bonuses, a 7 percent base salary increase, and the complete removal of the existing 50 percent cap on performance bonuses.
The conflict has been brewing for months after negotiations that began in December 2025 failed to produce an agreement, leading to a breakdown in March. While Samsung's management has urged a swift resolution, the demands come as its semiconductor division vastly outperforms other business units, creating internal friction over how profits should be shared.
This internal strife between the Device Solutions (DS) semiconductor arm and the Device Experience (DX) division, which handles phones and appliances, has even led to executive-level whispers of a potential spinoff, though analysts view a split as unlikely.
The situation at Samsung contrasts sharply with competitor SK Hynix, which resolved its own labor issues in September by agreeing to a plan to share 10 percent of its operating profit with employees. That deal has set a precedent that now pressures Samsung, whose stock performance has lagged SK Hynix by more than 25 percentage points since April.
Despite the labor risks, some analysts remain bullish on Samsung's fundamentals, citing a strong memory cycle and favorable long-term supply agreements. Daol Investment & Securities analyst Ko Young-min pointed to the strong contracting environment as a reason for his upgraded price target.
The potential strike threatens to erode Samsung's profitability just as it benefits from an AI-driven boom. The May 21 strike deadline serves as the next key date for investors, with JPMorgan noting that any stock weakness from the dispute could present a buying opportunity.
This article is for informational purposes only and does not constitute investment advice.
